Goldman Sachs Asia Index Strategy: FTSE China Index Series Review and Flow Implications

FTSE Russell announced the quarterly review results for its FTSE China Index Series on March 4, 2026, effective after the market close on March 20. The FTSE China 50 Index will add Weichai Power (H) and China Life (H), while removing Minsheng Banking (H) and ZTE (H). Concurrently, the FTSE China A50 Index will add China Shipbuilding (A), Wanhua Chemical (A), and Suzhou TFL (A), deleting Shanxi Xinghuacun Fen Wine (A), CRRC (A), and China Everbright Bank (A). The rebalancing entails weight adjustments of approximately 4.8% for the China 50 and 4.3% for the A50. Goldman Sachs estimates these changes could generate over $2 billion in total two-way passive flows for Chinese equities. The Capital Goods sector is positioned to receive the largest passive inflows at roughly $270 million, while Consumer Retail may face the most significant outflows near negative $280 million. Historically, FTSE China A50 additions have significantly outperformed deletions prior to announcement, though they typically experience a brief performance reversal post-announcement before recovering around the effective date. Post-rebalance, the A50's forward P/E rises from 11.4x to 11.8x, while the China 50's multiple remains steady at 9.3x.